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“The estimated savings of $1.1 billion gained . . . will provide the government with, at best, a small increase in consolidated revenue now, at the price of ­longer-term growth in the future," KPMG partner David Gelb said in a ­submission to the senate economics committee examining the bill.

“To the best of our knowledge, Australia will be the first country in the world to exclude such a specific and targeted subset of large companies from claiming an R&D tax incentive."

In opposition, the Coalition blasted Labor for removing incentives for the biggest companies to invest in R&D.

However, a bill replicating the previous government’s $20 billion threshold proposal passed the House of Representatives in December, and the Coalition cited the budget deficit as a reason for spending cuts.

Labor announced the change to help finance a $1 billion jobs plan. Labor and the Greens could vote against the legislation in the Senate. Labor has not yet decided how senators will vote, a spokeswoman confirmed on Sunday.

All submissions urge ditching

Venture capitalists and small to medium enterprises heavily dependent on testing new technology have already slammed an Abbott government decision not to move to quarterly payments of the R&D tax credit.

They had been pushing for the change to ease cash flow problems, but Assistant Treasurer
Arthur Sinodinos
ruled it out when he determined the fate of 64 unresolved tax and superannuation measures left behind by Labor.

Just four submissions have been made to the economics committee, all of which urged the changes be ­abandoned.

Medicines Australia, representing pharmaceutical companies, says none of its members will be affected.

“Even so, changing the R&D Tax incentive less than three years after it was implemented could harm Australia’s reputation as a stable and predictable business environment and undermine our ability to attract R&D investment for the future," the Medicines Australia submission says.

Labor suspected the rules were being rorted by large companies. It narrowed the scope of activity that could be claimed as R&D in a separate process before announcing the $20 billion threshold. By pursuing the changes, the Abbott government “is undermining its stated commitment to innovation", the KPMG submission also says.

“The message being sent to big business is that Australia cannot be relied upon to support R&D and that it should invest elsewhere."

The bill’s explanatory memorandum says small firms are more likely to increase their R&D spending due to government initiatives – an assertion KPMG rejects.

“We are not aware of any evidence which shows that small and medium businesses have a greater chance of commercialising R&D more profitably, quickly or efficiently than larger, more experienced companies.